FIGURE 7.1 The emergence of competitive advantage How does competitive advantage emerge? External sources of change e.g. Internal sources Changing customer demand Changing prices of inputs Technological changeo of change Some firms Some firms are faster and more effective Resource heterogeneity among firms creates winners and losers have greater creative and innovative in exploiting change capability
Figure 7.1 implies that stable industries, where firms have similar resources and capabilities, offer less opportunity for competitive advantage than industries where change is rapid and firms are heterogeneous. On the basis of these considerations, among the following industries, which do you predict that inter-firm differences in profitability will be small and in which will they be wide: retail banking, video games, wireless handsets, insurance, supermarkets, and semiconductors?